Business investment rose strongly in the second quarter to lift total spending above £30 billion for the first quarter since records began in 1966.

The figures provide further evidence that the economy is gathering pace and confirms the Bank of England's view that business investment is picking up after a subdued performance in 2005.

But there was no good news on manufacturing.

Manufacturing investment fell by 12.6 per cent from the previous quarter and 8.0 per cent from the same period a year ago, while private sector investment in services was up 3.5 per cent on the previous quarter and 5.5 per cent on the same quarter a year ago.

Data from the office of National Statistics showed business investment rose 1.7 per cent in the second quarter to £30.05 billion, 4.2 per cent up on the same period a year earlier.

This matched the growth rate seen in the first quarter and means that business investment has now risen for six consecutive quarters.

In its Inflation Report earlier this month, the Bank of England cited a positive out-look for business investment as one of the reasons it had become more optimistic on Britain's growth prospects.

The BoE is forecasting growth of 2.8 per cent this year - well above the Treasury's forecast of 2.0 to 2.5 per cent.

The figures will provide comfort to policymakers, many of whom have questioned why businesses were being slow to invest in an environment of strong corporate profitability and low interest rates.

Some have blamed under-funded corporate pension schemes, while others have cited concerns over rising energy costs.